Technical analysis: key levels for FTSE, DAX and Dow

Although relatively inactive this morning, the positive picture for global indices has not changed, helped by news of progress in talks between Ukraine and Russia and a truce between Israel and Hamas.

Data on screen
Source: Bloomberg

FTSE could reach 6880

The FTSE 100 has solidified its hold above 6800 this morning, and has moved above the 6820 level that posed some resistance yesterday. A close above here would certainly shift the emphasis back towards a run in the direction of 6880, although we were at these levels in the latter half of July before dropping back.

The daily relative strength index now shows an overbought reading, and given the magnitude of the bounce we have seen since the July low, a small pullback would not be out of the ordinary, with a drop back towards 6800 or even 6790 not endangering the upward move. In the short-term 6840 becomes the next resistance area to watch for, and with the intraday RSI overbought too some volatility to shake out the latecomers would not be surprising.

DAX eyes 9850

The DAX rally has stalled this morning just shy of the 9600 level and the 50-day moving average, but the break through the 200-DMA yesterday certainly keeps the market on the front foot. A close above 9600 would target 9706 as an immediate destination, with 9850 just beyond it.

The hourly chart shows that 9600 could provide something of a hurdle for the index, especially as the impact from Mario Draghi’s Jackson Hole remarks begin to fade. Nonetheless, the 100-hour moving average around 9440 should continue to provide support while the market remains in a positive frame of mind. The drop back from overbought territory for the intraday RSI means there is now the potential for a move higher in a manner that was probably a rather excessive ambition yesterday.

Dow could find support at 17,060

A fresh all-time high was recorded for this index yesterday, as the risk rally moves into high gear. Those with long-term timeframes will be looking towards areas above 17,200 as possible targets. The 17,060 level and then 17,000 could provide support if momentum falters, and the move into overbought territory for the daily RSI signals that some small move lower may well be in the offing.

Any such move is likely to be small however, and if the index finishes this week around current levels it will be a new weekly and monthly closing high. On the hourly chart, any dip towards the 50-hour MA has been swiftly bought, and with the RSI not flashing overbought a move through yesterday’s high is eminently possible. 

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